Countries & Regions

Strong country-wide economic growth, increased access to international financial markets, and efficient financial regulations, have contributed to the steady growth of the Peruvian microfinance market in recent years.  Growth of the sector is likely to increase in the near future as the newly elected President has implemented policy to increase rural microfinance outreach. This however raises questions of how growth objectives will be reached and whether it will lead to problems of over-indebtedness in the market. A detailed analysis of these issues can be found throughout the Peru Country Briefing:

• Overview: Peru has a highly developed microfinance sector, composed of various MFI actors, a number of financial institution associations and networks, and multiple supervisory and regulatory bodies.
• Supply & Demand: The market continued to see steady growth in 2010 in terms of borrowers, GLP, and deposits, with a shift seen in portfolio allocation away from consumer loans towards microenterprise lending.
• Funding: Client deposits continued to be the primary source of MFI financing in 2010, accounting for more than 60% of total funding. While the share of debt financing in the market has been decreasing, overall trends have shown both average loan terms and interest rates have gone down in recent years.
• Performance: With a market average of 5.7%, PAR indicators remain well above the rest of the region, with deposit-taking MFIs acting as the main driver of high risk loan portfolio.
• Quarterly Update: In-depth analysis of newly elected President Humala’s policy to increase the rural exposure of MFIs. Considers different scenarios for rural microfinance expansion and the question of whether the new policy is likely to lead to client over-indebtedness.

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